Finance or Rent a Car (Vehicle)?

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The numbers are rounded to a maximum of two decimals in the calculation.
An equivalent Excel sheet with higher precision might provide slightly different results.

When we plan to acquire a car, a truck or any other kinds of vehicle, we always wonder what cost the most between financing and renting. Financing is like a mortgage; you make payments on the vehicle until the balance reach 0$, and the car is yours at the end. In the case of long term leasing, you make payments to use the vehicle during the term. At the end, you don’t own the vehicle but you have an option to buy it. The buying option is established on a lease contract and is call the residual value. The one who rents pays during the term the equivalent of the amount finance minus the residual value, plus the other costs.

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Vehicle Contract terms

		Leasing		Financing
Selling price of the vehicle
Vehicle taken in exchange Exchange value of an old vehicle with the new one
Vehicle minus exchange Net amount to finance after the exchange. In the case of financing, the taxes are calculated after the exchange, which is a way to save taxes.
% Taxes Taxes on the amount. There is no taxes on the amount if you rent since you don't purchase the product.	%	N/A
Other amortized fees Administration fees or others that you add up on the amount to finance for the renting or financing services
Down payment Down payment available at the transaction	%		%
Taxes on the down payment In the case of a lease, the taxes are included in the down payment and are paid when getting the vehicle. We substract the taxes from the down payment available before applying it on the amount.				N/A

		Leasing		Financing
Net amount to finance Net amount in which the payments are calculate on
Term Number of monthly payments		months		months
Interest rate		%		%
Monthly payments For renting, the payments are executed at the beginning of the month and for financing, at the end.
Monthly payments plus taxes Monthly payments after taxes. You apply the taxes on each renting payments.				N/A
Residual value Residual value at the end of the leasing contract. You normally have the option to buy the vehicle at that price when your term ends.	%		%
Taxes on the residual value Taxes on the residual value when you decide to buy the vehicle at the end of the term				N/A
Residual value plus taxes Total amount of the buying option at the end of the term				N/A

Total cost of the vehicle including interests and taxes

	Leasing	Financing
Interests Total interests paid during the term
Taxes Total taxes paid during the term
Other fees
Total interests and taxes
Cost of the transaction Selling price of the vehicle plus interests, taxes and other fees	$	$

Value of the vehicle at the end of the term

	Leasing	Financing
Annual devaluation of the vehicle in %	%	%
Value of the vehicle at the end of the term

Savings and investments

	Leasing	Financing
Monthly savings invested when leasing Monthly savings generated with a smaller payment when you rent, and invested each month. The amount cannot surpass the difference between the financing payments and the renting payments.	Max:
Investment at the beginning (max: 0$) Amount invested at the beginning and through the whole term. You can test to see if an investment on the side is better then the taxes and interests you saved with a down payment and an exchange. The amount shouldn't surpass the selling price of the vehicle.
Interest rate of return compounded monthly Interest rate compounded monthly. Interests revenues are capitalized and reinvested each month.	%	%
Future value of the investment Value of the investment at the end of the term

View results:

Leasing without exercising the buying option at the end of the term vs. financing
Leasing when exercising the buying option at the end of the term with the savings and investments

Taxes and interests saved with a down payment and an exchange
Are down payment and exchange the best option to save money?

Leasing without exercising the buying option at the end of the term vs. financing

▲ Back

The transaction as an investment

	Leasing	Financing
Total amount disbursed during the term Exchange, down payment, savings at the beginning, monthly rent and monthly investments vs. exchange, down payment, savings at the beginning and monthly payments
Assets (vehicle and investments) acquired during the term Value of the monthly investments at the end of the term vs. value of the vehicle
Net loss Net loss on a car investment
% of the lost	%	%

Leasing when exercising the buying option at the end of the term with the savings and investments

▲ Back

If in the case of leasing, you invest every month the money you save with a smaller payment, and then you buy the residual value with the investments you cumulated, would it be cheaper to lease then to finance?

Is there an advantage to buy the vehicle at the residual value?

	Leasing	Financing
Residual value plus taxes written on the contract
Value of the vehicle at the end of the term
Profit (loss) on the transaction

If it's an open end lease, we don't have the choice but to buy the vehicle at the residual value and pay the loss (or gain a profit) at the end of the term. If it's a close end lease, we have the choice to bring back the vehicle to the dealership without any penalty, and the transaction stops there, as long as the user did respect the odometer limit and the maintenance.

	Leasing	Financing
Future value of the monthly investments
Price to pay for the vehicle including taxes at the end of the term
Profit (loss) Profit made on your investments after buying the vehicle at the residual value

Cost of the vehicle when you include the investments made on the side

	Leasing	Financing
Cost of the vehicle minus investments Total disbursement made on the vehicle minus the gain of interest made on the amount invested
Assets (value of the vehicle) Value of the vehicle
Net loss Net loss on a car investment
% loss Net loss on a car investment in %	%	%

Taxes and interests saved with a down payment and an exchange

▲ Back

	Leasing	Financing
Monthly payments without a down payment and an exchange
Interests without a down payment and an exchange
Taxes without a down payment and an exchange
Total taxes and interests without a down payment and an exchange

	Leasing	Financing
Value of the exchange
Down payment

	Leasing	Financing
Monthly payments including a down payment and an exchange
Interests including a down payment and an exchange
Taxes including a down payment and an exchange
Total taxes and interests including a down payment and an exchange
Taxes and interests saved with a down payment and an exchange

Are down payment and exchange the best option to save money?

▲ Back

If the down payment and the value of the exchange was invested instead, would the gain on interests form the investment would be higher then the taxes and interests saved with the down payment and the exchange?

Money invested instead of being applied on the transaction as a down payment and an exchange

	Leasing	Financing
Value of the down payment and the exchange in the beginning Value in money of the down payment and the exchange that would be invested at the beginning instead of being applied on the vehicle
Interest rate of return compounded monthly Interest rate compounded monthly. Interests revenues are capitalized and reinvested each month.	%	%
Future value of the investment at the end of the term

	Leasing	Financing
Gain of interests on the investment
Taxes and interests saved with down payment and exchange
Profit (loss) with an investment vs. down payment and exchange Gain in interests with the investment minus the taxes and interests saved with a down payment and an exchange. If the result is positive, then it would have been preferable to invest instead of applying the amount on the transaction as a down payment and an exchange.

To learn more about this chart, please read the chart section in our introduction.

Leasing A:
Leasing without cash down and exchange
Financing A:
Financing without cash down and exchange

Leasing B:
Leasing including cash down and exchange but excluding the investments (see extended version)
Financing B:
Financing including cash down and exchange but excluding the investments (see extended version)

Leasing C:
Leasing including cash down and exchange with the investments (see extended version)
Financing C:
Financing including cash down and exchange with the investments (see extended version)

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